Another agency backs higher debt ceiling

Labor is standing firm against a government plan to lift the national debt ceiling by $200 billion, even though another federal agency has backed the proposal.

Shadow treasurer Chris Bowen said "everyone" agreed the ceiling must rise and Labor had already agreed to support a $100 billion boost to $400 billion, rather than Treasurer Joe Hockey's proposed ceiling of $500 billion.

Related Articles

The government says $500 billion would provide a buffer for any future events requiring more debt issuance.

But Labor and the Australian Greens have called for the earlier release of the midyear budget review, which the government intends to put out mid-December.

Treasury secretary Martin Parkinson backed a $500 billion ceiling on Wednesday, saying the budget had deteriorated since his department's pre-election economic and fiscal outlook (PEFO) released in August.

Mr Nicholl said current information suggested the peak was more likely to be $470 billion.

Financial markets would be looking for certainty as the legislated limit was neared.

"Until that certainty is provided you will have the potential to create speculation about what could or couldn't happen," he said.

"We could momentarily be seen as more risky."

Having to raise the debt ceiling again could result in the government having to pay higher interest rates.